Customer Guide

A man living outside India who is a citizen of India or a man outside India who is of Indian root is a NRI. The meaning of Person resident outside India is characterized under segment 2(w) of Foreign Exchange Management Act, 1999 as “a person who is not resident in India”

A person shall be deemed to be a person not resident in India in the following cases:-

When the person stays in India for less than or up to 182 days during the preceding financial year

When a person who has gone out of India or who stays outside India, in either case –

For or on taking up employment outside India, or

For carrying on outside India a business or vocation outside India, or

For any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period

Who is an PIO?

A person of Indian origin means an individual (not being a citizen of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan) who:
• held an Indian Passport whenever, or
• who or whose father or fatherly granddad was a resident of India by righteousness of the Constitution of India or the Citizenship Act, 1955

Who can purchase immovable property in India?

Under the general permission available, the following categories can freely purchase immovable property in India:

Non-Resident Indian (NRI) – that is a citizen of India resident outside India.

Person of Indian Origin (PIO) – that is an individual (not being a national of Pakistan or Bangladesh or Sri Lanka or Afghanistan or China or Iran or Nepal or Bhutan), who

at any time, held Indian passport, or

who or either of whose father or grandfather was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 (57 of 1955).

The general consent, in any case, covers just buy of private and business property.

Can NRIs acquire commercial properties in India?

Yes, under the general authorization conceded by the Reserve Bank, property other than agrarian land/cultivate house/ranch property can be gained by NRIs gave the buy thought is met either out of internal settlements in remote trade through ordinary managing an account channels or out of assets from the buyer’s NRE/FCNR accounts kept up with banks in India and an affirmation is submitted to the Central Office of Reserve Bank in shape IPI 7 inside a time of 90 days from the date of procurement of the property/last installment of procurement thought.

What are the various facilities available to a NRIs/OCBS?

NRIs/OCB are granted the following facilities:

Maintenance of financial balances in India

Investments in securities/shares of, and deposits with, Indian firms/companies

Investments in immovable properties in India

Can NRIs acquire or dispose residential property by way of gift?

Yes, the Reserve Bank has conceded general consent to NRIs to gain or discard NRI India Properties by method for gift from or to a relative who may be an Indian native or a man of Indian orgin (PIO) whether resident in India or not.

Can NRIs sell the properties they hold in India without Reserve Bank’s permission?

Yes

Do non-inhabitant Indian nationals require consent of Reserve Bank to secure private property in India?

Reserve Bank has conceded general consent to outside subjects of Indian beginning, whether inhabitant in India or abroad, to buy steady property in India for their bonafide private reason. They are, in this manner, not required to acquire authorization of Reserve Bank.

Can NRIs obtain loan for acquisition of a house/flat for residential purpose from financial institutions providing housing finance?

The Reserve Bank has allowed some broad consent to certain money related establishments giving lodging fund e.g. HDFC, LIC Housing Finance Ltd., and so on, and approved merchants to allow lodging credits to NRI nationals for securing of a NRI house/level for self-occupation subject to specific conditions. Criteria in regards to the reason for the advance, edge cash and the quantum of credit will be at standard with those pertinent to occupant Indians. Reimbursement of the advance ought to be made inside a period not surpassing 15 years, out of internal settlement through managing an account channels or out of assets held in the speculators’ NRE/FCNR/NRO accounts.

Are there any customs required to be finished by remote natives of Indian origin for buying private relentless property in India under the general consent?

They are required to file a declaration in form IPI 7 with the Central Office of Reserve Bank at Mumbai within a period of 90 days from the date of purchase of immovable property or final payment of purchase consideration alongwith a certified copy of the document evidencing the transaction and bank certificate regarding the consideration paid.

Who can avail housing loan?

Following categories of individuals, in the age group of 18 to 55 years are eligible for housing loans:
a. Salaried individuals confirmed in the service with minimum service of 3 years.
b. Individuals engaged in business & self-employed persons like, doctors, chartered accountants, architects and others. Such persons should have been in the business for a minimum period of 3 years.
Eligibility relating to upper age limit is relaxed selectively, subject to certain conditions. However, entire loan should be cleared before the borrower attains the age of 70 years.

What is the quantum of loan?

The maximum loan is four times gross annual income of the concluded financial year OR four times of average gross annual income of preceding four financial years. A higher quantum is considered selectively
Minimum Net income/Net take home salary after meeting the installment of the proposed Housing loan should be 40%. This can be relaxed selectively to 25%.

How is the margin computed?

A. In case of Housing Loans where Project Cost is up to Rs. 10.00 Lacs, Stamp duty, Registration Charges and other Documentation charges can be included in the project cost for the purpose of stipulating Margin as well as for LTV ratio.
In all other cases other than above i.e., cases where project cost exceeds Rs. 10.00 Lacs, the margin shall be stipulated only on the basic Project Cost which shall not include expenses towards stamp duty, registration and other documentation charges. The margin is computed on the basic project cost which shall not include expenses incurred towards stamp duty, registration and other documentation charges).

When is the margin required to be brought in?

Margin should be contributed before disbursement of the loan. However, pro-rata and stage-wise contribution of margin is selectively permitted.

What are the purposes for which housing loan is sanctioned?

For purchase of ready built house / flat
For construction of house / flat
For purchase of site and construction of a house thereon
For undertaking expansion of existing unit, upgradation and creation of additional amenities
For undertaking repairs and renovations, subject to ceiling of Rs.15.00 lakhs
For taking over of the HL liability from other Public Sector Banks/Private Banks and NBFCs.

Whether Housing Loan is sanctioned for purchase of site only?

No. Housing loan is not sanctioned for purchase of site only.

Whether income of the family is reckoned for arriving at loan quantum?

In the case of salaried individuals/businessmen/self-employed persons, the income of the family may be taken into account, subject to documentary evidence, for the purpose of computing the quantum 2 of eligible amount of loan.
But in case of 2nd Housing loan, income of only spouse can be clubbed for this purpose.

Whether agricultural income is considered for arriving at loan quantum?

Yes, Agricultural income is considered if it is supported by land records and income is reported in Income Tax Return, though not taxed.

Whether income of the spouse can be taken to determine repayment capacity?

Yes,Where family income includes the income of the applicant and the spouse, the spouse’s income is reckoned to determine the repayment capacity and compliance of NTH stipulation, provided such spouse joins execution of loan documents.

What is an EMI?

EMI refers to equated monthly installment. It is a fixed amount which you pay every month towards your loan. It comprises of both, principal repayment and interest payment.

When does the repayment start?

EMI payments start from the month following the month in which the full disbursement has been made.

How is the EMI paid?

The EMI should be paid every month through post-dated cheques (PDCs) or direct deductions from your salary. If you are opting for PDCs, you will have to provide 36 upfront. These PDCs are to be dated for the 1st of every month. However, most financial institutions do have flexible rules for dating of the cheques, keeping in mind the delay in processing of salaries. For definitive details, check the rules and regulations of the financial institution you are associating with.

What if a PDC bounces?

In the case of a bounced cheque or delayed payment, charges and outstanding dues will be charged as per the prevailing company policy. You can replace old PDCs with new ones within 5 - 7 working days.

What is pre-EMI interest?

In the case of part disbursement of the loan, monthly interest is payable only on the disbursed amount. This interest is called pre-EMI interest (PEMI) and is payable monthly till the final disbursement is made, after which the EMIs would commence.

When do I pay PEMIs?

The first PEMI is payable by cheque by the end of the month in which the disbursement is made. Each subsequent PEMI is payable at the end of every month till the commencement of EMI.